Getting a life insurance from a reputable life insurance company is one of the most important decisions that everybody could make in his financial life. However, it is a decision that is usually taken from granted until an unexpected life event happens to our family that makes us regret why we didn’t avail one.
But before getting one, we should answer the following questions in order:
1. Do I need life insurance?
2. How much do I need?
3. What kind of Life Insurance do I need?
Do I need Life Insurance?
Ask this to yourself, if you think that someone would suffer financially if you die, then get a life insurance. The possible persons might be:
1. Your family
2. Your parents
3. Your employees(if you have a company)
How much do I need?
Some experts say that you need 5x up to 20x of your annual income but in reality you should seek first from a financial expert on having a financial expense analysis. First step is to gather all the financial expenses of your family including their financial obligations when you are gone.
Their expenses can be divided into three:
· Immediate expenses
These expenses are those things that are uncontrollable in nature. These are medical expenses, your taxes, funeral expenses and any debts that you have.
· Ongoing expenses
These are the expenses that you need to live. Compute your needs for food, shelter, utilities, medicine, clothing and insurance.
· Future expenses
Do you have kids that need to pay tuition fees in the future? Probably yes I presume? Then add this to the list of your financial obligations as well as your retirement expenses fund.
So, this would be the formula of how much you need:
Current and Future Financial Obligation – (Family’s Savings + Life Insurance You Already Own + Investments) = Life Insurance you need
I hope these information helped you! Tune out for the second part of this article which will help you decide on what type of life insurance will benefit you most.
But before getting one, we should answer the following questions in order:
1. Do I need life insurance?
2. How much do I need?
3. What kind of Life Insurance do I need?
Do I need Life Insurance?
Ask this to yourself, if you think that someone would suffer financially if you die, then get a life insurance. The possible persons might be:
1. Your family
2. Your parents
3. Your employees(if you have a company)
How much do I need?
Some experts say that you need 5x up to 20x of your annual income but in reality you should seek first from a financial expert on having a financial expense analysis. First step is to gather all the financial expenses of your family including their financial obligations when you are gone.
Their expenses can be divided into three:
· Immediate expenses
These expenses are those things that are uncontrollable in nature. These are medical expenses, your taxes, funeral expenses and any debts that you have.
· Ongoing expenses
These are the expenses that you need to live. Compute your needs for food, shelter, utilities, medicine, clothing and insurance.
· Future expenses
Do you have kids that need to pay tuition fees in the future? Probably yes I presume? Then add this to the list of your financial obligations as well as your retirement expenses fund.
So, this would be the formula of how much you need:
Current and Future Financial Obligation – (Family’s Savings + Life Insurance You Already Own + Investments) = Life Insurance you need
I hope these information helped you! Tune out for the second part of this article which will help you decide on what type of life insurance will benefit you most.